Consider working past your original retirement date
It’s always good to have a plan of action in every situation. But you also have to keep in mind that even the most carefully thought plans can go south. If you’ve already planned your retirement, date and all, you might need to postpone your plans for a while. Staying in the workforce a few more years could help you boost your retirement savings.
Moreover, if you are lucky enough to receive a pension from your employer, sticking with your 9 to 5 job a little bit longer can pad your bottom line. In some cases, the pension is calculated by averaging together the worker’s three highest-earning consecutive years. So, make your last years in the workforce count!
See also 14 States Where Your Pension Won’t Get Taxed.
Make catch-up contributions
If you’re aged 50 or more (or you will be 50 the same year) you can make contributions to your 401(k) plan. By doing so, you will be able to recover a part of your losses. For 2021, the catch-up contribution limit remains at $6,500 while the limit for IRA contributions remains at 2020’s limit of $6,000.
If you can, increase your 401(k)-contribution rate by at least one percent every year. A smaller percentage will have a low impact on your paycheck but a great impact on your long-term nest egg. More than that, transfer a portion of your raises or bonuses to your savings accounts.
Make sure you also check out these 25 Tips to Boost Your 401(K) Now!
